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TIBCO Can't Stay Obscure Forever

This treasure is hiding in plain sight.

Do you know TIBCO Software(Nasdaq: TIBX)? Can't blame you if you don't. Even the meager herd of 11 Wall Street analysts who follow this enterprise software company don't seem to understand what it is. But that may be changing.

One prominent analyst with a $4 price target on what was an $11 stock at the time recently emailed CEO Vivek Ranadive with a simple message: "I think I'm wrong, I think you guys are right, and I'm getting out." Sure enough, that firm no longer covers TIBCO. Maybe next quarter, Ranadive will no longer need to spend large chunks of the analyst call explaining his business to people who should already know.

What the analyst suddenly understood is that plain old database transactions aren't good enough to handle business intelligence today. TIBCO's "information bus" messaging system goes a step further, turning lifeless data into actionable information triggered by events, rather than transactions. If that distinction doesn't make intuitive sense to you, you're in the very good company of most analysts again.

Using an example from Ranadive, Reliance Industries of India noticed that customers of its prepaid cell phone plans tended to go elsewhere after their sixth dropped call in a 24-hour period. Data mining against the company's traditional database diagnosed the problem, but did nothing to solve it. Using a TIBCO event-driven solution, Reliance set up a rule to notice the fifth dropped call and send out an automated apology, along with credit for a few free SMS messages. The customer churn problem immediately faded away.

You can't do that with a traditional database and business-intelligence setup from the likes of Oracle(Nasdaq: ORCL), SAP(NYSE: SAP), or IBM(NYSE: IBM), although all three are now giving legitimacy to TIBCO's model by working on their own copies of it. But TIBCO has more than a decade of experience with its information-bus software, serving big-time customers with massive data flows such as Citigroup(NYSE: C), AT&T(NYSE: T), and Allstate(NYSE: ALL).

TIBCO is small, carrying a $1.8 billion market cap even after today's 4% run-up to five-year highs. It's mostly ignored by Wall Street, and often misunderstood even when the analysts do pay attention -- because what the company does is obscure even to industry insiders. TIBCO isn't an official Motley Fool Hidden Gems recommendation, but the company sure fits that market-beating mold to a T.

The stock is rising, and analysts are catching on. Is this the perfect time to invest in TIBCO? Discuss in the comments below.